Zimbabwe suffers from fuel crisis

Apr 24, 2005 02:00 AM

Zimbabwe's social and economic sectors are on the brink of collapse as crippling fuel shortages have resurfaced while
a combination of power blackouts and water shortages have gripped cities around the country threatening to grind
industry and commerce to a halt. Apart from that, Zimbabwe has run out of food with reports that the country has only
60,000 tons of maize left, enough to feed the nation for only two weeks.
Industrialists and commentators said that Zimbabwe's industry and commerce would soon collapse if the current
problems bedevilling the country are not urgently addressed. Already, the transport industry is reeling from the fuel
crisis. Earlier, most commuter buses were grounded, leaving workers stranded especially in the country's major towns
of Harare, Bulawayo, Gweru, Mutare and Masvingo.

Obert Mpofu, the Minister of Industry and International Trade, insisted that the fuel situation would have improved
within a few days.
"All stakeholders are working towards arresting thefuel problem," Mpofu said.
One of the causes of the current crisis is the delay in paying fuel suppliers. As much as $ 2.5 mm due to suppliers
since February has not been released and this has adversely impacted on the creditworthiness of Zimbabwean fuel
importers. The reason for the delay in paying external fuel suppliers was a demand by the authorities to four or five
indigenous fuel importers who reportedly failed to account for the money they were given to import fuel.

As a result of the delay in releasing the funds since February, a consortium supplying the southern half of the
country has not been able to bring in fuel because the external suppliers, among them Sasol, are reluctant "to put
good money after bad money".
In smaller towns such as Kadoma and Kwekwe, Marondera and Zvishavane, the situation is equally bad and has given rise
to a thriving parallel market. In Gweru and Harare, five litres of petrol are going for $ 150,000 and $ 60,000
respectively on the parallel market, against an average pump price of $ 3,600. Unscrupulous public transporters were
cashing in on the crisis charging as much as $ 5,000 for the Harare to Chitungwiza route, twice the gazetted fare.

Long queues of desperate motorists, wasting productive time in search of fuel, have become the order of the day at
many service stations in the country. On the power supply front, the countrywide blackout resulted in loss of
business for most companies.
Most food outlets in Harare were reduced to soft drinks retailers after the power cuts prevented them from preparing
fresh food. In supermarkets, perishables such as meat and milk products were thrown away after they went bad --
resulting in huge losses for businesses.
"Our losses run into millions of dollars," said a manager at a supermarket in Harare's Central Business District
(CBD).

The scarcities of fuel and electricity blackouts are also likely to impact negatively on the Zimbabwe International
Trade Fair (ZITF) in Bulawayo and the Harare International Festival of the Arts (HIFA), which kick-off.
Eric Bloch, an economic analyst, warned that power and fuel shortages were set to worsen the country's social and
economic decline and called on the government to increase the fuel pump price to make it more viable for procurement
companies.
"The pressure by government on distributors to keep fuel prices down could further worsen the fuel crisis. The
current price is prohibitive to producers," he said.

Economist, John Robertson, attributed the fuel crisis to lack of incentives to encourage fuel procurement companies
to import fuel. He suggested the fuel price be increased to $ 7,000 a litre.
Robertson said: "The scarcity of foreign currency mainly due to the loss of tobacco earnings, loss of beef earnings
and many other industries and sectors is also contributing to the fuel crisis. Export industries are not closing but
shrinking because the economic environment is not favourable."

The president of the Employers' Confederation of Zimbabwe (EMCOZ),Mike Bimha, said the power supply irregularities,
water cuts and fuel shortages impact negatively on the overall performance, resulting in low production levels. For a
worker to give optimum performance and increase productivity in the workplace, he said, one needs to have peace of
mind.
"Imagine waking up to go to work and there is no water for you to bath, no electricity to warm your water up and cook
food then there is no transport to ferry you to work? How many problems can befall a person?"

Collin Gwiyo, deputy secretary general of the Zimbabwe Congress of Trade Unions (ZCTU) said the problems were a
result of bad governance and called for dialogue between the ruling party and the opposition Movement for Democratic
Change (MDC).
Zesa general manager (corporate affairs), Obert Nyatanga, said that electricity interruptions are going to continue
until the end of the winter season due to increased demand.
"However, with the encroaching winter peak period, demand for electricity will outstrip supply and the region has run
out of excess power to export to deficit markets like Zimbabwe during peak periods," Nyatanga said.

Zesa said it was unable to access the 100 MW power import from SNEL of the Democratic Republic of the Congo (DRC) due
to a transmission failure (fault).
The parastatal said two of its generators at Kariba and Hwange Power Stations are not working due to a critical
shortage of spare parts. The Consumer Council of Zimbabwe (CCZ), a body created to protect the interests of the
consumers, was saying it needed to consult broadly.